IBM Wields SoftLayer In Cloud Battle With Amazon Web Services

IBM lost its battle with Amazon Web Services over a coveted CIA cloud computing contract, but it's confident that a big recent cloud acquisition will help it knock AWS off its lofty perch.

SoftLayer, the public cloud vendor infrastructure-as-a-service vendor IBM acquired in July for $2 billion, is the centerpiece of a new IBM print, online and outdoor advertising campaign that seeks to change the perception that AWS is the cloud's most dominant player.

The first three ads, which debuted on Monday, make direct comparisons of where IBM stands versus AWS in terms of expertise, infrastructure and specific types of customers, Ric Telford, vice president of IBM Cloud Services, told CRN.

[Related: Amazon Wins $600 Million CIA Cloud Deal As IBM Withdraws Protest ]

"This campaign is a reality check on what it means to be a leader in cloud computing. It's a way to make people aware of IBM's leadership in the space," Telford said in an interview.

SoftLayer's long history in the hosting business, and the fact that customers can purchase dedicated servers or pay based on what they use, makes it attractive to a wide range of customers, Telford said.

SoftLayer was already competing with AWS when IBM acquired it. Since the deal closed, SoftLayer has signed up more than 1,000 new customers, including many that would have otherwise gone to AWS, Telford said.

Chris Pyle, CEO of Champion Solutions Group, a Boca Raton, Fla.-based IBM partner, said the SoftLayer deal is important for IBM in terms of bringing new DNA to the company. "They're born in the cloud and they understand how to move and react quickly," he said of SoftLayer.

Last week, IBM informed customers that it's shutting down its SmartCloud Enterprise cloud IaaS service and will move them over to SoftLayer by the end of January. One IBM partner told CRN that's good news because SmartCloud Enterprise contracts have been "cumbersome," sometimes running between 30 and 40 pages long.

If a customer wanted to add something to their contract, like additional processing power, they had to change the whole statement of work, which took time to do, said the source.

However, partnering with SoftLayer hasn't traditionally been lucrative, with commissions typically "in the low double-digits," said the source, who requested anonymity to avoid damaging his relationship with IBM.

SoftLayer does about 50 percent of its business through the channel and has a program focused on hosting resellers and strategic partners such as MSPs and ISVs that deliver SaaS applications, Drew Jenkins, channel chief at SoftLayer, told CRN last month.

NEXT: Where IBM's SoftLayer Ads Will Appear

AWS is constantly cutting pricing for compute, storage and other services, and IBM SoftLayer will have to avoid getting pulled into that game, Champion Solutions Group's Pyle said.

"Cloud services are becoming so commoditized that SoftLayer and IBM are going to have to figure out how to add value in this race to zero," he said.

IBM will place its SoftLayer campaign ads on buses and strategically placed billboards, as well as at upcoming Amazon events, IBM's Telford said. Amazon will hold its AWS re: Invent conference in Las Vegas next week.

A common knock on AWS is its lack of enterprise-grade support. Telford said IBM isn't focusing on support in its current group of ads, but said future ads may highlight the superiority of IBM's support offerings.

Telford wouldn't say how much IBM is spending on the campaign, which runs through the end of the year. He said it will account for a "pretty significant chunk" of IBM's quarterly advertising budget.

"Our goal is to put the facts out there and let companies with AWS take a hard look at what we have to offer," Telford said.

While IBM fought long and hard for the $600 million, 10-year CIA cloud contract, losing it was no big deal, Telford said.

That's because IBM has won several high-profile government cloud deals recently, including a 10-year, $1 billion cloud deal with the Department of the Interior in August and a $30 million cloud contract with the General Services Administration last month.

Ultimately, IBM believes its enterprise background and SoftLayer cloud assets will help it win the hearts and minds of government agencies.

"We are by no means discouraged by the CIA situation," Telford said. "We will win more than we lose in the government space."

PUBLISHED NOV. 6, 2013